Chapter 17 Section 1

Question 1

REMEMBER THE DRAWINGS ON LAW OF DEMAND, LAW OF SUPPLY, AND MARKET PRICE AND DEFINITION

Question 2

Economic System

Answer 2

How people obtain goods and services

Question 3

3 types of Economic Systems

Answer 3

1. Traditional: based on how things were done in the past - Barter System
2. Command: Government makes all economic decisions and owns all businesses
3. Market: Decisions are made by individuals interests

Question 4

What is the motivation in a free market system?

Answer 4

Profit Motive

Question 5

Effects of competition

Answer 5

lower prices, better quality, greater variety, new products, scarcity: combo of limited resources and unlimited wants

Question 6

Law of Supply

Answer 6

Businesses will produce/supply more products when they can sell them at a higher price

s-UP-ply

Question 7

Law of Demand

Answer 7

Buyers will want/Demand more of a product when prices are lower

-D-emand

Question 8

Market Price

Answer 8

Price where businesses can make a PROFIT and buyers are willing to pay

Question 9

Principles of free enterprise

Answer 9

Businesses operate without interference from the government - you can make a huge profit or you can lose it all

Question 10

Main driving force behind the American economy

Answer 10

Capitalism: all means of production are owned by private citizens

Question 11

Monopolies

Answer 11

One company is the only one selling a product. It can set any price it wants. They are illegal except for utilities